Vertiv Rises 13% in a Month: Time for Investors to Buy the Stock?

Core Viewpoint - Vertiv (VRT) has experienced significant stock performance, with a 12.5% increase over the past month, outperforming the broader Zacks Computer & Technology sector and the Zacks IT Services industry [1][3]. Group 1: Company Performance - Vertiv serves data center providers and is benefiting from strong AI-driven order growth, with a backlog of $7.4 billion, reflecting a 47% year-over-year increase and a 5% sequential increase [2][5]. - The company expects fourth-quarter revenues between $2.12 billion and $2.17 billion, indicating an organic growth rate of 11-15% year-over-year, with non-GAAP earnings projected between 80 cents and 84 cents per share [6]. - For the full year 2024, Vertiv anticipates revenues between $7.78 billion and $7.83 billion, indicating an organic growth rate of 13-15% year-over-year, with non-GAAP earnings expected between $2.66 and $2.70 per share [7]. Group 2: Product and Capacity Expansion - Vertiv is expanding its manufacturing capacity globally, currently operating 23 plants, to meet the increasing demand driven by AI [8]. - The company has opened a new 215,000 square feet facility in Pelzer, SC, to support the production of integrated modular solutions and other systems for data centers [9]. - Vertiv has enhanced its liquid cooling portfolio with new products designed to support high-density computing for AI applications [10]. Group 3: Strategic Partnerships - Vertiv has collaborated with NVIDIA to launch a 7MW reference architecture for AI infrastructure, optimizing power and cooling for AI-driven data centers [11]. - The company is working with Ballard Power Systems to develop scalable backup power applications for data centers, integrating fuel cell power modules with its UPS systems [12]. - Vertiv has added ZincFive's UPS battery cabinets to its backup power systems portfolio, further enhancing its offerings for data center resilience [13]. Group 4: Valuation and Investment Outlook - Despite strong growth prospects, VRT shares are considered to have a stretched valuation, with a trailing Price/Book ratio of 26.02, significantly higher than the sector median [14]. - Vertiv's dominance in thermal management for data centers is viewed as a key growth driver, supported by an improving liquidity position [17].